The stricken maintenance firm is now in administration after its shares were suspended and the banks refused extra finance.
The collapse of such a high profile business is a disaster for staff. But clients will also suffer as they are forced to find new contractors.
Connaught’s demise has been caused by a whole host of factors. But chief among them is bidding too low to win work.
Suicide bidding is a blight on construction and clients have to play their part by refusing the obvious temptations to go with the lowest price.
It’s no use handing a contract over to a firm which has jeopardised its financial future by quoting too low and could go pop before the job is finished.
Talk of quality, value and partnering seems like a bygone age in the current fight for the smallest margin.
If firms are daft enough to bid for work they can’t make a return on then clients have to take the lead by going with a more sensible price which will at least see the job finished.
Clients – particularly in the public sector – should be named and shamed if they encourage contractors to bid recklessly by always going for the cheapest deal.
Connaught is one of the biggest names to get caught-up in suicide bidding. But the practice is rife at all levels across the country and can only end in more failures and half-finished contracts.
Alarm bells should have been ringing last year when Morrison Facilities Services went to court over Connaught’s “abnormally low” bid to win a maintenance contract from Norwich City Council.
Morrison was the incumbent contractor but lost out when its renewal bid of £23m was beaten by a price of £17.5m from Connaught.
That’s a bid of more than 20% below Morrison’s price.
Norwich officials may have looked like they were saving cash. But that won’t be the case if they have to find a new contractor just months into the job.
The message is clear. Suicide bidding helps no-one in the long run.
It forces contractors under because no business can survive with a minimum margin strategy while clients run the risk of unfinished work and hunting for replacement firms.
